Consider a work center with a demand rate of 20 parts per hour and using a container that can hold 5 parts. It is estimated that the container takes 30 minutes to cycle through the work cell. Assume a safety stock level of 10 percent. What is the maximum inventory level for this system?
A) 5
B) 10
C) 15
D) Cannot be determined from the information given

Question

Quizplus · Accepted Answer

First, we need to calculate the cycle time (CT):
CT = Container size / Demand rate 
CT = 5 / 20 = 0.25 hours (15 minutes)

Next, we need to calculate the holding time (HT):
HT = CT / 2 
HT = 0.25 / 2 = 0.125 hours (7.5 minutes)

Now, we can use the formula for maximum inventory level (MI):
MI = (Demand rate * HT) + Safety stock level * Container size 
MI = (20 * 0.125) + 0.1 * 5 
MI = 2.5 + 0.5 
MI = 3

However, since we can't have a fraction of a part in inventory, we need to round up to the nearest whole number. Therefore, the maximum inventory level for this system is 15 (3 containers x 5 parts per container).

Consider a Work Center with a Demand Rate of 20